Withdrawal cap hike may add to ATM companies’ losses

MUMBAI: The RBI’s move to increase ATM withdrawal limits without improvement in cash supply could lead to machines drying up sooner, fear ATM network operators. Also lobbying by banks to reduce the number of free transactions to three from five could lead to fewer transactions which will add to ATM operators‘ losses.

“We were hoping that in the absence of any breakthrough in discussions with banks on the issue of compensation of the costs incurred during the demonetisation period, the cap on ticket sizes would continue. A cap in ticket size results in more aggregate transactions per ATM per month. With the lifting of the caps, there will be an increase in the ticket sizes, and hence a reduction in the number of transactions,” said Himanshu Pujara, MD, Euronet Services India – an ATM operator
He added that losses made by ATM operators range between Rs 330 crore to Rs 380 crore between November 2016 and January 2017. This is now a viability issue for key industry players as their balance sheets are not large enough to absorb losses of this size, the Confederation of ATM Industry (CATMI) has said. Meanwhile, some banks who are net issuers (whose customers use their cards for withdrawal in other bank’s ATMs) have lobbied with RBI to bring down the number of free transactions to three a month. The banks contend that higher frequency of transactions is hurting their balance sheet as they have to pay the ATM owning bank for every transaction.